Upon booting, when I should see the GRUB menu, my monitor simply says: "No optimum mode. Recommended mode: 1600*1200". If I wait for a short while, Ubuntu starts to boot and it reaches the desktop.

So I guess there is no video signal during that time, there's the grub menu but I cant see it and after the wait time everything is fine. I have the same problem when I log out for a short moment, before the log in screen is reached. and this also happens when i shut down ubuntu.

Open up /etc/default/grub as 'root' (using sudo gedit /etc/default/grub, for example)

Uncomment the GRUB_GFXMODE line

Change the resolution to 800x600 (the lowest resolution for the video card)

Then type sudo update-grub

Here's what I'm talking about. This is an extract from /etc/default/grub:

# The resolution used on graphical terminal
# note that you can use only modes which your graphic card supports via VBE
# you can see them in real GRUB with the command `vbeinfo'
# GRUB_GFXMODE=640x480